The latest on California politics and government

December 12, 2013

A conservative advocacy group in Sacramento says the IRS erroneously yanked its nonprofit status this summer, hampering the group's ability to raise money this year.

"I don't know if it's incompetence or if we were targeted. I honestly don't know," said Karen England, executive director of Capitol Resource Institute. "But I find it interesting."

The faith-based group opposes abortion and same-sex marriage. It has been active this year in pushing a referendum to overturn Assembly Bill 1266, which allows transgender students to use bathrooms and locker rooms that reflect the gender they identify with, rather than the gender of their birth.

Other conservative groups complained this summer that they were receiving undue scrutiny from the IRS when applying for nonprofit status. Groups affiliated with the tea party said the Obama administration was targeting them because of their political orientation.

Federal tax authorities grant groups nonprofit status if they primarily engage in "social welfare" activities. But many of those groups are also active in politics, creating a murky area in the world of campaign finance. The Obama administration last month proposed a new set of rules to clarify the kinds of political activity nonprofit groups can perform, and California's political watchdog agency fined two political nonprofits this fall for not properly reporting campaign donations.

England said the IRS revoked her group's nonprofit status over the summer on grounds that it had failed to file all necessary paperwork. The action was in error, she said, because the organization had properly filed everything, but it took several months to sort out the mistake.

In the meantime, Capitol Resource Institute was unable to solicit donations. England said she skipped her salary for six months so that she could keep paying her staff while donations were not coming in.

An IRS spokesman said the agency cannot comment on specific cases. England provided a letter the IRS sent Capitol Resource Institute on Dec. 5 that says, "We have confirmed that you were erroneously put" on the list that revokes nonprofit status.

England is highlighting the snafu in an end-of-year fundraising appeal, saying "we hope that our donors rise to the occasion and see the harm that has been done."